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Open letter: Continue the LiveSmartBC Energy Incentive Program

My letter to Christy Clark, Premier of B.C.; Rich Colman, Ministry of Energy and Mines; Mike de Jong, Ministry of Finance; Terry Lake, Minister of Environment; Adrian Dix, Leader of the Opposition; John Horgan, Official Opposition House Leader and Opposition Critic for Energy, Mines and Petroleum Resources; Rob Fleming, Opposition Critic for Environment:

I am writing as an economist and lead investigator for the Climate Justice Project of the Canadian Centre for Policy Alternatives, but also personally as a past recipient of subsidies from the LiveSmartBC Energy Incentive Program (EIP). I believe that funding support for this program should continue beyond March 31, 2013, and further, that a major expansion of the program is warranted. This program is an important part of climate action in B.C., and supports precisely the type of green jobs the province needs as an alternative to the exploitation of fossil fuels that are contributing to global warming.

In my own experience with the LiveSmart program I was grateful for provincial support that encouraged me to get an energy audit. There is a basic market failure in household energy due to imperfect information. Like most people, we just paid our bills and really had no idea how a house operated as a system, what the big draws for energy were (heating and hot water are the top two for us and most homes) and what a more efficient home would look like (caulking, not new windows). Just getting the information about how our home rated and what to think about for improvement was liberating.

I have written about my experience with the LiveSmartBC program, from initial audit through retrofits to final audit, here. All homes in B.C. should have access to a free energy audit -- indeed, for certain older homes audits should be mandatory -- plus provincial government support towards retrofits. With federal withdrawal from funding support through its ecoENERGY program, LiveSmartBC should fill the gap that has been created.

There is an important public good aspect to energy efficiency programs, associated with gains in system-wide efficiency (less need for new generation capacity) and reductions in greenhouse gases. In that context we need more of these programs not less, but perhaps aimed at older, draftier housing stock to get the maximum benefit of public funds. It is particularly important that B.C. improve energy efficiency of homes and appliances, but also that funding support the shift from natural gas to clean electricity, including more efficient modes of electric heating and cooling, such as heat pumps. Similarly, financing reform to remove the barrier of upfront costs for retrofits, and link the cost to the property rather than the current owner, is needed.

Unfortunately, retrofit programs for rental housing stock and multi-unit buildings have not really progressed beyond a few pilot programs. A new LiveSmartBC 2.0 could help by delivering targeted energy efficiency programs for low-income households and multi-unit buildings, including rental units. Low-income households are typically renters. This means they are less likely to have capacity to invest in energy efficiency upgrades. This is particularly important with looming BC Hydro rate increases that will have an adverse impact on low- to middle-income households.

Currently, the vast majority of public subsidies for retrofits goes to affluent homeowners in single-family dwellings. Existing programs have been criticized for two common problems: free rider effects (public subsidies going to households who would have made investments anyway) and rebound effects (where savings are offset by increased energy use). In contrast, well-designed programs for energy efficiency for low-income households are "low-hanging fruit" that would dramatically reduce these effects, target some of the province's least efficient housing stock, and make better use of public dollars.

In our Climate Justice Project report, Fighting Energy Poverty in the Transition to Zero-Emission Housing: A Framework for BC, we estimate that a budget of $220 million per year in support of a decade-long retrofit of B.C.'s housing stock would lead to substantial reductions in GHG emissions and energy poverty in B.C. homes. Carbon tax revenues are an ideal source of public subsidies for such a program. This investment would support approximately 12,000 direct green jobs per year, based on standard B.C. Stats multipliers.

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